Principal activities

The principal activity of the company is the construction of dwellings for group companies and others.

This report outlines the strategic direction, performance, and governance of the company operating within the UK housebuilding sector during the period February 2025 to January 2026. The report reflects the company’s response to market conditions, regulatory requirements, and evolving housing demand across the United Kingdom.

The trading environment has remained challenging throughout the period, which has impacted financial performance year on year. Key financial metrics are summarised below:

Operational Metrics

During the year, the following metrics were achieved:

• Plot completions            81 (2025: 36)

• Affordable Housing completions     30 (2025: 45)

• Build starts            1 equating to 164 plots

• Planning permissions        2 equating to 180 plots

Private plot completions were 125% higher than the prior year at 81 versus 36, reflecting the conversion of carried forward stock unsold in the previous year. Market conditions continued to be influenced by affordability pressures, mortgage availability and wider economic uncertainty, resulting in cautious buyer behaviour.

Sales activity remained variable throughout the period and the mixed messaging and lack of Government stimulus to the Housing sector during the summer of 2025 certainly caused further uncertainty. Whilst there were early signs of stabilization in mortgage rates the recent war in Iran and continuing conflicts in the Ukraine have increased pressure on inflation and expectations of Bank of England base rate reductions are not flowing through as a result. Furthermore, affordability remains a key constraint for many purchasers and Consumer confidence continues to require further support to stimulate transaction levels across the housing market.

The Group operated from 5 active selling outlets during the year with an additional 2 fully sold during the year. Developments continue to offer a diverse product mix, enabling the Group to appeal to a broad customer base, supported by a targeted and proactive marketing strategy.

In response to market conditions, the Group has continued to utilise a range of sales incentives including part exchange, assisted move schemes and other tailored solutions to support buyers and maintain sales rates.

The Group remains focused on minimizing completed stock levels to avoid stock holding costs by reviewing build programs versus sales rates. Whilst operating profits have improved as a result of higher plot sales, elevated borrowing costs continue to impact overall profitability. Active management of stock levels and financing arrangements remains a key focus of the Board.

Cost pressures have persisted across the sector, particularly in relation to materials and subcontract labour. Whilst inflationary pressures have moderated compared to prior periods, pricing remains elevated. The Group continues to mitigate these challenges through strong supplier relationships and proactive procurement strategies.

Planning continues to present a significant constraint to growth, with local authorities facing ongoing resource limitations. Despite this, the Group has made good progress in advancing its strategic land portfolio, with a number of sites progressing through the planning system, providing a solid foundation for future delivery.

The Group continues to support the UK Government’s ambitions to increase housing supply. However, achieving these targets will require meaningful reform across the planning system and wider development process to enable more efficient delivery of new homes. Any Government initiatives such as the expired Help to Buy scheme to stimulate demand particularly for first time buyers would be welcome.

The Group’s long-term strategy remains focused on the acquisition and promotion of strategic land, converting this into consented developments to support a sustainable pipeline of future projects.

Following the year end, progress on key developments and planning consents provides increased visibility over future delivery. Forward sales on selected sites have strengthened the Group’s cash position and support resilience against ongoing economic uncertainty.

The Directors remain confident in the long-term prospects of the Group and its ability to adapt to evolving market conditions.

Macroeconomic Environment

The reporting period has been characterised by a number of significant macroeconomic factors which have directly impacted the UK housing market and are expected to continue influencing performance in the year ahead.

Interest rates remained elevated for much of the period as the Bank of England continued its efforts to manage inflation. Although there were glimmers of hope that inflationary pressures were easing the recent conflict in the Middle East has pushed up fuel prices and borrowing costs have remained high relative to historical levels, directly impacting mortgage affordability and buyer demand.

Inflation, whilst moderate compared to prior years is creeping up again which has continued to affect both consumer confidence and build costs. Materials and labour costs are less volatile but remain at heightened levels, placing continued pressure on margins across the sector.

The wider UK economy has experienced low growth, with periods of stagnation impacting consumer sentiment. Affordability constraints, coupled with cost of living pressures, have contributed to cautious purchasing behaviour among prospective homeowners.

As the sector moves into 2026, there were initial signs of cautious recovery and stabilisation following the contraction seen in 2024 and 2025. However, it is our view that Industry output will grow modestly but perhaps at a slower pace than forecasts initially suggested. With this uncertainty, we believe that pursuing our Strategy, aligning our development sites in the right Geographical locations and using a balanced blend of tenure types will stand us in good stead. We will also continue to partner with the right Housing Associations to deliver much needed affordable housing.

House prices are expected to see modest growth over the year, with increases generally forecast between 1.5% and 4%. Mortgage rates had begun to stabilize but have become a little more fragile more recently, but affordability remains a key constraint, particularly for first-time buyers, due to lending criteria and deposit requirements.

The change in UK Government has introduced renewed focus on housing delivery, including proposed planning reforms and infrastructure legislation aimed at unlocking development sites. Whilst these measures are welcomed by the industry, their effectiveness will depend on implementation, the capacity of local planning authorities and how quickly changes take to filter through the planning process. Furthermore, it will depend on how the sector can stimulate demand as Consumer confidence, given such uncertainty in the market place is making buyers very cautious.

Additional regulatory pressures are emerging, including the introduction of the Building Safety Levy, which is expected to increase costs for developers putting even further strain on the industry.

Labour shortages continue to present challenges to the construction sector albeit less so in the areas we operate which could limit the pace at which developments can be delivered. This is compounded by an ageing workforce and ongoing skills shortages. This is mitigated via recruitment, training and retention strategies.

Sustainability requirements are also increasing, with greater emphasis on energy efficiency and environmental performance of new homes. This presents both a challenge in terms of cost and an opportunity to differentiate through high-quality, future-proofed developments.

Looking ahead, the outlook for the remainder of 2026 is one of cautious optimism. Recovery is expected to be gradual rather than rapid, with demand anticipated to improve should mortgage conditions stabilise. Increased use of partnership models, including collaborations with housing associations and institutional investors, is expected to play a greater role in delivery.

From a regional perspective, the South Coast market continues to experience many of the national trends but with additional localised pressures. Affordability constraints remain particularly acute due to comparatively higher house prices relative to earnings. Demand from both local purchasers and inward migration remains supportive; however, transaction levels continue to be influenced by mortgage availability and pricing.

Planning constraints remain especially pronounced across South Coast locations, with environmental considerations such as nutrient neutrality continuing to restrict the release of developable land. Phosphate neutrality requirements impacting the River Avon catchment and nitrate neutrality requirements affecting the Solent region have created significant barriers to development. These constraints have required developers to secure mitigation solutions adding both cost and complexity to the planning process. Whilst challenging to date, we have managed to navigate through these constraints to continue to develop. Local authority resourcing challenges have further contributed to delays in securing planning consents, but we continue to pursue good working relationship with planning departments.

Despite these challenges, the South Coast remains an attractive long-term market, supported by strong underlying demand, desirable locations, and limited housing supply. The Group continues to focus on progressing its strategic land interests in the region, working closely with stakeholders to unlock sites and deliver sustainable developments.

We would welcome further government support measures, potentially including revised equity loan schemes, to provide additional stimulus to the housing market and support transaction volumes.

The Group continues to monitor these macroeconomic factors closely and will adapt its strategy accordingly to mitigate risks and capitalise on emerging opportunities.

As with any business, the Group faces risks and uncertainties in the course of its operations. It is only by timely identification and effective management of these risks that we can deliver our strategy and grow the business.

The board have considered the prospects of the company and have considered its current financial position and its principal risks. Fundamentally, these arise from the deterioration of the health of the UK economy, brought about by uncertainty, loss of consumer confidence, higher interest rates and increasing unemployment, leading to decreased affordability, reducing demand for housing, and falling house prices.

The main activities of the group are that of building and development of private dwelling houses for sale. With this comes the potential risks such as:

• The adverse effects on consumer confidence could significantly impact the demand for new homes resulting in lower revenues and profits. Pricing reviews and continually monitoring supply and demand trends as well as forward looking forecast will allow the Group to navigate any challenges it may face.

• Economic and political uncertainty is always going to present challenges. Whether that is at a global or local level it will always be difficult to plan ahead. The ambitions of the Labour Government which was set out in their manifesto intended to benefit the industry by increasing numbers of housing being built. It is well documented that this, to date, has been exceptionally challenging and thus far this ambition is falling short. The Group remains optimistic that some hard hitting Government decisions will be made and quickly to stimulate activity to achieve the overall target. Furthermore, government policy on taxes, inflation and spending will all play its part on the sector.

• Mortgage servicing costs remain a key risk for homeowners, particularly amid ongoing interest rate volatility and persistent inflationary pressures. This makes affordability one of the fundamentals of buying houses difficult, particularly for first time buyers. Most house sales are bought using mortgages to finance the purchase. Mortgage rates are higher than the last decade and whilst we saw some settling down for a period, we are starting to see some slight creep up in rates considering the recent conflict in Iran. The impact of Government policy and the Bank of England rate charges in the coming months and years will play a key role in consumer confidence.

• Since 2022, borrowing rates have been rising markedly and have a significant impact on the group as funding costs become more expensive making development project less profitable or in some cases unviable. The Group continually manages this by working with its funders to obtain the best cost effective funding available.

• Liquidity and the availability of cash is a constraint to any business. The Group monitors cash availability and constraints periodically. During the year the Group also entered into a Revolving Credit Facility of £70 million which demonstrates the supportive nature its lending partners.

• Continuing to operate best practice with our Health and Safety to best protect those on potentially dangerous construction sites is of paramount importance to us. Any legislative changes to these practices would filter through our external advisors to all relevant personnel via tool box talks, site inductions, and formal training sessions. Employee wellbeing and mental health is particularly important in the construction sector and is regarded as one of the highest sectors of sufferers. Employee wellbeing is integral to ensuring the workforce have a safe, enjoyable environment to work in and the intangible benefit of this is a more effective workforce.

• Material cost inflation and supply have seen prices escalate in recent years with the advent of a number of global factors causing economic volatility and demand. Prices are starting to stabilize although we are not seeing any evidence yet of a reduction in prices. Locking in prices on a long-term basis is proving difficult as the overall supply chain itself wrestles with uncertainty. This uncertainty is also leading to a worsening of credit terms when exploring new suppliers so continuing and leveraging existing relationships are paramount.

• An aging construction workforce, coupled with decreasing apprenticeship intake and the Brexit leakages, are potentially leading to skills shortages of workers. This will be a major concern over the next decade and will have a detrimental impact on meeting demand. The tight labour market, cost of living crisis and increases in National Minimum Wage are all driving higher wages in the sector. Being able to attract and retain high calibre employees to meet the demands of the business as it grows is of paramount importance. As the business grows, the demands and skillsets of individuals need to change to cater for ever changing dynamics of the house building industry. Training and recruitment alongside other factors such as remuneration are constantly reviewed and monitored to ensure the group remains competitive when attracting and retaining staff. Employee engagement and feedback sit alongside our recruitment and retention processes.

• Planning consents remain challenging with local authorities struggling with resource constraints coupled with demonstrating nutrient neutrality on development sites. Issues surrounding Nitrates flowing into the Solent and Phosphates into the River Avon has been a challenge for all development areas affected, practically grinding planning permissions to a halt. Buying into third party schemes has provided a much needed solution in relation to Nitrates. We have resolved the Phosphates problem by being one of the first in the UK to create a strategic Phosphate mitigation scheme.

• Local Authorities often insist on Property Developer entering into bond agreements to de-risk their exposure for any unfinished construction activity if a developer defaults. Unfortunately, this is becoming increasingly onerous particularly for SME developers. The cost of bonds, the cash tie up, and the shrinking surety market is making the position untenable with limited options available which potentially delays site delivery. All options continually get reviewed and solution are being explored.

On behalf of the board

The directors present their annual report and financial statements for the year ended 31 January 2026.

No dividends will be distributed for the year ended 31 January 2026.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

The Company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the companies Strategic Report information required by Large and Medium-sized companies and Groups (Accounts and Reports) Regulations 2008, sch. 7 to be contained in the Directors’ Report. It has done so in respect of future developments

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law, the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period.

In preparing these financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and accounting estimates that are reasonable and prudent; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

We have audited the financial statements of Pennyfarthing Construction Limited for the year ended 31 January 2026 which comprise the statement of comprehensive income, the balance sheet and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

· give a true and fair view of the state of the company's affairs as at 31 January 2026 and of its profit for the year then ended;
· have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
· have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

• the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

• the financial statements are not in agreement with the accounting records and returns; or

• certain disclosures of directors' remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

Based on our understanding of the company and industry, we identified that the principal risks of non-compliance with laws and regulations related to breaches of UK regulatory principles, such as those governed by the relevant construction authorities. We also considered the laws and regulations which have a direct impact on the financial statements such as the Companies Act 2006.

We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to management bias in accounting estimates and judgmental areas of the financial statements.

Audit procedures performed by the audit engagement team included:

• Discussions with senior management, including consideration of known or suspected instances of noncompliance with laws and regulations or instances of fraud;

• Identifying and testing journal entries based on risk criteria;

• Designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing;

• Testing transactions entered into outside of the normal course of the company's business;

• Reviewing any potential litigation or claims against the entity which indicate any potential noncompliance issues.

There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or though collusion.

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

We obtained an understanding of the legal and regulatory frameworks that are applicable to the company and determined that the most significant frameworks which are directly relevant so specific assertions in the financial statements are those that relate to the reporting framework (UK GAAP and the Companies Act 2006) and the relevant tax compliance regulations in the UK.

We understood how the company is complying with those frameworks by making enquiries of management and those responsible for legal and compliance procedures. We corroborated our enquiries through review of board minutes and discussions with those charged with governance.

We assess the susceptibility of the company's financial statements to material misstatement, including how fraud might occur, by discussion with management from various parts of the business to understand where they considered there was a susceptibility to fraud. We considered the procedures and controls that the company has established to prevent and detect fraud, and how these are monitored by management, and also any enhanced risk factors such as performance targets.

Based on our understanding, we designed our audit procedures to identify any non-compliance with laws and regulations identified in the paragraphs above.

We also performed audit work over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for bias.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

The profit and loss account has been prepared on the basis that all operations are continuing operations.

Pennyfarthing Construction Limited is a private company limited by shares incorporated in England and Wales. The registered office is Pennyfarthing House, South Drive, Ossemsley, New Milton, Hampshire, England, BH25 5TL.

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:

• Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;

• Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;

• Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;

• Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.

The financial statements of the company are consolidated in the financial statements of Pennyfarthing Developments Limited. These consolidated financial statements are available from its registered office,

The company is a member of the Pennyfarthing Developments Limited group of companies. Its business activities, current financial position and the risks which the directors consider may impact the business in the future are set out in the Strategic Report and Directors Report.true

The resources available to the company are monitored as a part of the overall group process. Plans and forecasts are made 3 year's in advance. These plans are periodically reviewed with sensitivities applied to stress test the outcomes. Input from all departments is sought so the best possible insight is provided.

These plans allow for cash forecasts to be considered in the short, medium and long term. Weekly cashflows considering the next six to twelve months ensure that short term cash is always readily available.

On this basis the directors consider it is appropriate to prepare financial statements on a going concern basis. The financial statements do not include any adjustments that might be necessary if the going concern basis was no longer appropriate.

Turnover comprises the fair value of the consideration received or receivable, net of value added tax, in respect of property development and after eliminating sales within the group. In particular:

• Residential property revenue is recognised on completion of the sale of the property.

• Contract development revenue is recognised throughout the construction as the work is done.

• Rental income from investment property and freehold interests is recognised on a straight line basis over the life of the lease.

Tangible fixed assets are stated in the balance sheet at cost, less any subsequent accumulated depreciation and subsequent impairment losses.

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life or, if held under a finance lease, over the lease term, whichever is the shorter.

Classification

The company holds the following financial instruments, all of which are considered to be basic.

• Short term debtors and creditors

• Loans and borrowings

Recognition and measurement

Financial instruments are recognised when the company becomes party to the contractual provisions of the instrument.

Short term debtors and creditors

Basic financial assets includes short term trade and other debtors. Basic financial liabilities includes short term trade and other creditors. Such instruments are initially measured at transaction price including transaction costs, and are subsequently carried at the undiscounted amount of the cash or other consideration expected to be received or paid.

Cash at bank and in hand

Cash at bank and in hand are basic financial assets and include cash in hand, deposits held at call with banks and bank overdrafts. Bank overdrafts are shown within borrowings within current liabilities.

Loans and borrowings (including bank overdrafts)

Loans which meet the criteria under FRS102 to be classed as basic financial instruments.

Bank loans are initially measured at transaction price, including transaction costs, and are subsequently carried at amortised cost using the effective interest method.

Other loans are initially measured at transaction price, including transaction costs, and are subsequently carried at the undiscounted amount of the cash or other consideration expected to be paid or received.

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

Taxation for the year comprises current and deferred tax. Tax is recognised in the Statement of Comprehensive Income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to profit or loss in the period to which they relate.

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Hire purchase and leasing commitments

Assets obtained under hire purchase contracts or finance leases are capitalised in the balance sheet. Those held under hire purchase contracts are depreciated over their estimated useful lives. Those held under finance leases are depreciated over their estimated useful lives or the lease term, whichever is the shorter.

The interest element of these obligations is charged to profit or loss over the relevant period. The capital element of the future payments is treated as a liability.

Preparation of the financial statements requires the directors to make significant judgements, estimates and assumptions. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and associated assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in that period and future periods where the revision affect both the current and future periods.

The main accounting estimates are:

Depreciation - the group establishes a reliable estimate of the useful lives of tangible fixed assets.

Investment property valuation - The group establishes a reliable estimate of the market value of investment properties based on internal valuations and the directors expertise in this area.

Land stock values - The company establishes a reliable estimate of the market value of the land which it holds in stock for future development and provides for any loss in value based on internal valuations and the directors expertise in this area.

Assessment of costs to complete - This involves estimating final development costs and selling prices and impacts profit recognised in allocating costs to sales completions before and after the year end.

Accrued costs - involving a degree of estimation uncertainty in respect of final account settlement.

The average monthly number of persons (including directors) employed by the company during the year was:

Directors' remuneration is borne by the another group entity and disclosed in those financial statements.

The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

Tangible fixed assets includes assets held under finance leases or hire purchase contracts, as follows:

Hire purchase contracts, which are secured debts, are included within creditors at £324,393 (2024: £194,367).

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

During the year the company entered into the following transactions with related parties:

Pennyfarthing Developments Limited is regarded by the directors as being the company's ultimate parent company.